Shares Fall On Second Quarter Miss
hares Fall On Second Quarter Miss
Shares of ride-hailing company Uber rallied 8.2% higher ahead of its second-quarter earnings report, only to plunge by 12% in after-hours electronic trade immediately following the earnings results, which were a huge disappointment to investors.
Uber missed on both the top and bottom lines, reporting revenues of $3.17 billion versus $3.36 billion expected, and a loss of $5.24 billion or $4.72 a share, versus expectations of a $3.12 per share loss. Much of the loss was attributed to stock based compensation.
In a conversation on CNBC, Uber’s CEO Dana Khosrowshahi admitted the losses are huge right now, but also said that2019 will be the peak investment year for the company and that losses will drop in 2020 and 2021.
After backing out stock based compensation the loss was a far more palatable $1.3 billion, although that was still about 30% worse than the first quarter loss.
While ride-hailing remains the primary business at Uber, the company has been expanding into other areas such as food delivery, freight services and bike sharing. These businesses have been a drag on earnings as well, and Khosrowshahi has frankly admitted the UberEats platform isn’t likely to see profitability any time soon, although it is a core area of growth for the company.
It remains questionable when Uber might become profitable, despite Khosrowshahi’s claims that the company could easily reach break-even “if we really wanted to.”
Recently the stock plunged after announcing it was cutting 400 marketing jobs. The earnings news puts additional pressure on the stock, but the $40 level looks to provide support.
